DIMENSION ECONOMICA

Helped Reduce Vented

Gas, According to EPA and

Industry Participants

Although Interior has the primary role in federal oil and gas leasing, EPA’s Natural Gas STAR program has encouraged some operators to adopt technologies and practices that have helped to reduce methane emissions from the venting of natural gas, according to EPA and industry

participants. Through this program, industry partners evaluate their emissions and consider ways to reduce them, although the reductions are voluntary. The program also maintains an online library of technologies and practices to reduce emissions that quantify the costs and benefits of each emission-reduction option. Natural Gas STAR also sponsors

conferences to facilitate information exchange between operators regarding emissions reductions technologies. Partner companies report annually about their efforts to reduce emissions along with the volumes of the emission reductions.61

According to the Natural Gas STAR Web site, domestic oil and gas industry partners reported more than 114 Bcf of methane emission

reductions in 2008, which amounts to about 0.4 percent of the total natural gas produced that year. However, one industry representative said that, while large and midsize operators were aware of the Natural Gas STAR

60

One consulting firm we spoke with used infrared cameras to detect leaks on clients’ offshore oil platforms and found, on average, 21 gas leaks per facility, totaling an estimated 127,000 cubic feet of gas per day.

61

In addition to the Natural Gas STAR program, EPA’s Office of Research and Development is developing specialized measurement approaches to remotely detect and quantify air emissions, including methane, from the oil and gas industry and other sources.

program, smaller operators were not aware and, even if some smaller operators were aware of the program, they may not have the

environmental staff to implement the technologies and practices. Despite the potential usefulness of information from the Natural Gas STAR program to oil and gas producers on federal leases, some of the BLM officials that we spoke with were unfamiliar with Natural Gas STAR.

Fulfilling its responsibility to ensure that the country’s oil and natural gas assets are developed reasonably and result in fair compensation for the American people requires Interior to have accurate and complete information on all aspects of oil and natural gas leases. Interior has collected some information on vented and flared gas through MRM’s OGOR system, but without a full understanding of these losses Interior cannot fully account for the disposition of taxpayer resources or identify opportunities to prevent undue waste. MRM’s OGOR data system does not provide information on all sources of lost gas, which is the primary source of data that BLM uses to measure overall vented and flared gas onshore. Therefore, OGOR data present an incomplete picture of venting and flaring onshore, leading BLM officials to believe that vented and flared gas

volumes do not represent a significant loss of gas on federal leases.

Similarly, data in BOEMRE’s GOADS data system differ considerably from data in OGOR, and have not been reconciled—raising questions about the accuracy of offshore data sources.

Conclusions

Regarding Interior’s oversight of operators venting and flaring gas,

because current guidance and regulations from BLM and BOEMRE do not require the minimization of all sources of vented and flared gas––although legislation exists authorizing them to require that waste on federal leases be minimized––operators may be venting and flaring more gas than should otherwise be allowed. In fact, we found that operators are not using available technologies in all cases to economically reduce vented and flared gas. BLM guidance has not kept pace with the development of economically viable capture technologies for a number of sources of lost gas, and BOEMRE has been reluctant to consider the economic and technical viability of minimizing the waste of “lease-use” gas because officials had believed they were legally constrained from doing so.

In addition to the limitations of these regulations, BLM and BOEMRE have not used their authority in two situations where they could potentially further reduce venting and flaring. First, neither agency has used its authority to minimize waste beyond relevant air quality standards by assessing the use of venting and flaring reduction technologies before

production. Second, because BLM lacks data about the use of venting and flaring technologies for onshore leases and BOEMRE does not analyze its existing information for offshore leases in its GOADS data system, these agencies are not fully aware of potential opportunities to use available technologies. Further, neither agency takes full advantage of newer infrared camera technology that can help to identify sources of lost gas— as BOEMRE officials have acknowledged, this technology could help reveal additional sources of lost gas.

Ultimately, a sharper focus by BOEMRE and BLM on the nature and extent of venting and flaring on federal leases could have multiple benefits. Specifically, increased implementation of available venting and flaring reduction technologies, to the extent possible, could increase sales volumes and revenues for operators, increase royalty payments to the federal government, and decrease emissions of greenhouse gases. In addition, our analysis of WRAP and EPA data showed as much or more vented and flared gas on nonfederal leases, and we share the observation with EPA officials that a spillover effect may occur, whereby oil and gas producers, seeing successes on their federal leases, take similar steps on state and private leases.

To ensure that Interior has a complete picture of venting and flaring on federal leases and takes steps to reduce this lost gas where economic to do so, we are making five recommendations to the Secretary of the Interior.

Recommendations for